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Urgent Call To Fold Medical Security Program into Commonwealth Care

Michael J. Widmer, President of the Massachusetts Taxpayers Foundation, says the Medical Security Program for low-income, unemployed workers needs immediate attention:

Massachusetts employers are about to be hit with a doubling of the tax they pay to fund the Medical Security Program (MSP), which provides subsidized health insurance to low-income, unemployed workers. The timing of the increase couldn't be worse, and it underscores the urgent need to phase out the program and fold it into Commonwealth Care, which provides subsidized health insurance coverage to low-income individuals under the 2006 health reform law.

The MSP was created two decades ago as part of the state's first attempt at universal health insurance, and employers are completely on the hook for keeping it solvent. Over the past two years, high levels of unemployment, combined with several extensions of unemployment benefits by the Congress, have resulted in a huge increase in the program's costs. Faced with an almost $100 million deficit in 2010, the state board that oversees the program voted last month to increase the employer tax from $16.80 to $33.60 per-employee, which will keep the MSP solvent until the end of next year and preserve about $300 million in federal Medicaid funding.

The MSP tax hike, while necessary to preserve health coverage for some 34,000 unemployed residents, is yet another deterrent to job creation in Massachusetts just as the Commonwealth tries to dig itself out of the worst economic and fiscal crisis in decades. Massachusetts employers are already coping with the highest business costs in the nation, and they are facing a 30 to 40 percent increase in unemployment insurance taxes in 2010.

The Patrick administration and the Legislature made a good faith effort to help soften the blow by appropriating $30 million from the General Fund to help cover part of the deficit. Also, MSP benefits were changed modestly to encourage participants to seek higher quality, lower cost care.

It's worth noting that the MSP would still be well in the black and there would be no need for an employer tax increase had lawmakers not chosen to drain it of $190 million to pay for other health care costs back in fiscal 2001 and 2002. The assertion by the Massachusetts Budget and Policy Center that the shortfall was caused by the state's failure to increase the employer tax to keep pace with inflation is both unfair and a clear misreading of the law. Nevertheless, there's no reason that, in addition to being the only state in the nation with nearly universal coverage, Massachusetts should be the only state that taxes employers to subsidize coverage for unemployed workers.

Admittedly, there are complicated issues involved in synching up eligibility and enrollment standards for the MSP and Commonwealth Care, but, as the employer tax increase makes clear, a fix is overdue.

This program aired on December 9, 2009. The audio for this program is not available.

Rachel Zimmerman Twitter Health Reporter
Rachel Zimmerman previously reported on health and the intersection of health and business for Bostonomix.

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